50.5% or 59 of the respondents do not plan on retiring until age 71, if at all, indicating that advisors plan on working longer than the average retirement age, according to a advisor retirement survey conducted by CLS Investments.
CLS Investments has released survey results on a study it did of its affiliated advisors, focused on the advisor’s own retirement plans and objectives.
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The survey, conducted in the first quarter of 2014, surveyed 117 independent financial advisors from across the country.
On top of that, most expect the sale of their businesses to fund the majority of their retirement with 41.1% of respondents expecting the sale of their business to represent 26-50% of their retirement assets and 14% expecting it to fund 51-100% of their retirement.
"It is clear to us that independent advisors need a wake up call — they are relying overwhelmingly on their businesses to fund their retirement," said Todd Clarke, CEO of CLS. "But they fail to account for the fact that should something happen to them, or if their business does not sell for the right price, they, like most Americans will be woefully underfunded for retirement."
While 39.9% of respondents intend to sell their business to another advisor, or merge with a younger advisor at retirement age, only 19 advisors in the survey indicated they have a completed, formal succession plan.
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By GlobalDataCLS believes that as the advisor industry continues to age, options are emerging for succession planning beyond the typical solution of selling a practice. And for many advisors, despite assumptions, selling their businesses may not provide the financial means to fund their own retirements.
Clarke continues: "Selling a practice, while seemingly an attractive option may not be in the advisor’s best interests, or may not be what the advisor truly wants to do. Advisors need to consider putting in place business planning strategies that will provide continuity of the firm, with the option of continuing to stay involved in the practice."
CLS supports the notion of "reinventing" an advisory practice irrespective of an advisor’s desire to sell — rather, the advisor should make a focused effort to establish legal agreements, creating operational efficiencies, and potentially bringing in junior staff.
At minimum, advisors owe it to themselves and their clients to take action now, positioning themselves with the most choices, flexibility, and options for enjoying their businesses and careers, while ensuring their clients are well taken cared for.
